Press Release: Statement by the IMF Mission at the Conclusion of its Visit to Rwanda

April 16, 2013

Press Release No. 13/124
April 16, 2013

An International Monetary Fund (IMF) mission, led by Mr. Paulo Drummond, visited Kigali during April 5-18 to conduct the sixth review under the Policy Supports Instrument (PSI).1 The mission met with Minister of Finance and Economic Planning Amb. Claver Gatete, National Bank of Rwanda (NBR) Governor Hon. John Rwangombwa and other senior officials, as well as representatives of the private sector and development partners. The mission thanks the authorities for their hospitality and constructive discussions.

At the conclusion of its visit to Kigali, the mission issued the following statement:

“Rwanda continues to face the challenge of adjusting to the partial suspension and delays in donor budget support. The government appropriately adjusted economic policies in 2012 by re-phasing some spending to the first half of 2013 and by preparing a supplementary budget this year which reduces current spending in line with available resources. At the same time, the NBR responded by tightening monetary policy, and tapping into its foreign reserves buffer to cushion the impact of the aid shortfall.

“Economic activity has been quite resilient. Despite a modest slowdown in the second half of the year, gross domestic product (GDP) growth was 8 percent in 2012, driven by the expansion of the construction and service sectors. Meanwhile, inflation pressures have eased as the supply shock of high food and fuel import prices has wound down. However, pressures in the foreign exchange market, starting in the second half of 2012 and partly related to high private sector credit growth, led to a sharp contraction in the foreign reserves of the NBR even though the NBR limited its sales to the market.

“Performance under the IMF-supported program has been broadly satisfactory. Most quantitative indicators for end-December 2012 were met and good progress was achieved on the structural reform agenda.

“The economic outlook for 2013 has weakened somewhat since the fifth review. The growth of the construction and service sectors is expected to slow down in response to tighter economic policies. This will be partly offset by stronger growth in agriculture (food crops), for which the first harvest of the year was good, and an acceleration in foreign-financed investment projects. Growth is expected at 7.5 percent for the year. Downside risks predominate, stemming from possible cutbacks in aid, delays in project implementation, and a more challenging global environment. Inflation is expected to rise to 7.5 percent by end-2013.

“The authorities and the mission agreed on economic policies and reforms that are consistent with the objectives of the economic program supported by the PSI. In particular, the mission welcomed the authorities’ decision to preserve policy buffers and allow greater exchange rate flexibility, while making full use of monetary policy instruments. The 2013/14 budget will aim to sustain efforts to mobilize revenue, adjust spending to available resources while protecting priority spending, and limit domestic financing. The authorities agreed to prepare a medium-term revenue mobilization plan by June, building on advice from the IMF’s Fiscal Affairs Department. On monetary policy, the NBR aims to maintain a tight monetary stance with a view to preserving macroeconomic stability.

“The authorities plan to issue a euro bond in the coming days in the amount of US$400 million, to be used exclusively to retire short-term debt and complete strategic investment projects as planned.

“The mission welcomes the authorities’ second Economic Development and Poverty Reduction Strategy (EDPRS2), particularly the emphasis on innovative and inclusive growth and further reduction in poverty, including the eradication of extreme poverty. Mobilizing resources to support this ambitious economic agenda will be key to facilitating its effective implementation.

“The IMF's Executive Board is expected to consider the sixth PSI review and an extension of the current PSI through December in June 2013.”

1 Details on Rwanda’s current PSI are available at


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